Filed On 5/22/06 3:19pm ET · SEC File 333-134362 · Accession Number 1144204-6-21979

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As Of Filer Filing As/For/On Docs:Pgs Issuer Agent

5/22/06 Patriot Scientific Corp SB-2 5:270 Vintage Filings LLC/FA

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Registration of Securities by a Small-Business Issuer · Form SB-2

Filing Table of Contents

Document/Exhibit Description Pages Size

1: SB-2 Registration of Securities by a Small-Business HTML 1,073K

Issuer

2: EX-5.1 Opinion re: Legality HTML 9K

3: EX-10.45 Material Contract HTML 84K

4: EX-23.2 Consent of Experts or Counsel HTML 6K

5: EX-23.3 Consent of Experts or Counsel HTML 6K

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SB-2 · Registration of Securities by a Small-Business Issuer

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Unassociated Document

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

ON MAY 19, 2006

REGISTRATION NO. _____________

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM SB-2

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

PATRIOT SCIENTIFIC CORPORATION

(Name of small business issuer in its charter)

DELAWARE 3699 84-1070278

(State or Jurisdiction of Incorporation or Organization) Primary SIC Code (I.R.S. Employer Identification Number)

CARLSBAD CORPORATE PLAZA

6183 PASEO DEL NORTE, SUITE 180

CARLSBAD, CA 92011

(760) 547-2700

(Address and telephone number of principal executive offices)

THOMAS J. SWEENEY, CHIEF FINANCIAL OFFICER

PATRIOT SCIENTIFIC CORPORATION

CARLSBAD CORPORATE PLAZA

6183 PASEO DEL NORTE, SUITE 180

CARLSBAD, CA 92011

(760) 547-2700

(Name, address and telephone number of agent for service)

COPIES TO:

OTTO E. SORENSEN, ESQ.

LUCE, FORWARD, HAMILTON & SCRIPPS LLP

600 WEST BROADWAY, SUITE 2600

SAN DIEGO, CALIFORNIA 92101

(619) 236-1414

(619) 232-8311 (FAX)

APPROXIMATE DATE OF PROPOSED SALE TO

THE PUBLIC: AS SOON AS PRACTICABLE AFTER THE

EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price Per Unit (3) Proposed Maximum Aggregate Offering Price Amount of Registration Fee

Common Stock, $0.00001 par value (1) 17,204,442 $0.84 $14,451,731.28 $1546.34

Common Stock, $0.00001 par value (2) 4,980,000 $0.84 $4,183,200.00 $447.60

TOTAL 22,184,442 $18,634,931.28 $1,993.94

(1) Shares of the Registrant’s common stock, $.00001 par value per share, are being registered for resale on behalf of certain selling security holders. The common stock being registered was issued to the selling security holders between February 3, 2004 and March 23, 2006.

(2) Shares of the Registrant’s common stock, $.00001 par value per share, are being registered for resale on behalf of certain selling security holders. The common stock being registered is issuable to the selling security holders on their exercise of warrants which were issued from April 26, 2004 through March 1, 2006.

(3) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(c) under the Securities Act of 1933, as amended (the “Act”), based on the average of the closing bid and asked prices for the Registrant’s Common Stock (the “Common Stock”) as reported on the OTC Electronic Bulletin Board on May 12, 2006.

The information in this preliminary Prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission (SEC) is effective. This preliminary Prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

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SUBJECT TO COMPLETION; AS FILED WITH THE SECURITIES AND

EXCHANGE COMMISSION ON MAY 19, 2006

P R O S P E C T U S

PATRIOT SCIENTIFIC CORPORATION

THE OFFERING

The resale of up to 22,184,442 shares of common stock in the over-the-counter market at the prevailing market price or in negotiated transactions.

We will receive no proceeds from the sale of the shares by the Selling Shareholders.

TRADING SYMBOL

PTSC (Over-the-counter Electronic Bulletin Board)

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.

Please refer to Risk Factors Beginning on Page 1

THE SECURITIES AND EXCHANGE COMMISSION (SEC) AND STATE SECURITIES REGULATORS HAVE NOT APPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, NOR IS IT THE SOLICITATION OF AN OFFER TO BUY THESE SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE OF THESE SECURITIES IS NOT PERMITTED.

Please read this Prospectus carefully. It describes our company, finances and products. Federal and state securities laws require that we include in this Prospectus all the material information that you will need to make an investment decision.

We have not authorized anyone to provide you with information that is different from that which is contained in this Prospectus.

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TABLE OF CONTENTS

Page

PROSPECTUS SUMMARY 1

About our Company 1

Warrant Shares We Are Registering 1

Additional Shares We Are Registering 1

Key Facts 1

RISK FACTORS 1

Patriot Has Reported Substantial Revenue In 2006 Which May Not Be Indicative Of Our Future Revenue Trends 2

Patriot Is Dependent Upon A Joint Venture In Which It Is A Passive Partner For Substantially All Of Its Revenues 2

Patriot’s Limited Sales And Marketing Capabilities Have Affected Our Revenue 2

Patriot May Experience Difficulties In The Completion Of Its Development Stage Products 2

Patriot Is Currently Involved In A Legal Dispute Which Could Impact Our Future Results Of Operations And Working Capital Position 3

A Successful Challenge To The Proprietary Nature Of Our Intellectual Property Would Have A Significant And Adverse Effect On Us 3

If A Large Number Of Patriot Shares Are Sold All At Once Or In Blocks, The Market Price Of Our Shares Would Most Likely Decline 3

The Market For Patriot’s Stock Is Subject To Rules Relating To Low-Priced Stock (“Penny Stock”) Which Limits Our Ability To Attract Competitive Funding 3

Our Share Price Could Decline As A Result Of Short Sales 4

Our Future Success Depends In Significant Part Upon The Continued Services Of Our Key Senior Management 4

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 4

PLAN OF DISTRIBUTION 4

SELLING SHAREHOLDERS 5

Selling Shareholders 5

OUR COMPANY 6

Background 6

AVAILABLE INFORMATION 6

BUSINESS 6

Technology 7

Our Microprocessor Technology 8

Our Licenses, Patents, Trade Secrets and Other Proprietary Rights 11

Research and Development 13

Marketing and Distribution 14

Dependence Upon Single Customers 14

Employees 14

Government Regulation 14

Description of Property 15

USE OF PROCEEDS 15

LEGAL PROCEEDINGS 15

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 16

Overview 16

Critical Accounting Policies 17

Results of Operations 18

Liquidity And Capital Resources 21

Recent Accounting Pronouncements 22

SELECTED FINANCIAL INFORMATION 23

MANAGEMENT 25

Committees of the Board Of Directors 26

Compliance with Section 16(a) of the Exchange Act 27

Code of Ethics 27

Indemnification of Officers, Directors and Others 27

EXECUTIVE COMPENSATION 28

Employment Contracts 28

Option Grants 29

Compensation of Directors 30

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 30

Certain Relationships and Related Transactions 32

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 33

DESCRIPTION OF SECURITIES 33

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 34

LEGAL OPINION 34

EXPERTS 35

INDEX TO FINANCIAL STATEMENTS F-1

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PROSPECTUS SUMMARY

About our Company

Patriot Scientific Corporation was organized under Delaware law on March 24, 1992, and is the successor by merger to Patriot Financial Corporation, a Colorado corporation, incorporated on June 10, 1987. Our address is Carlsbad Corporate Plaza, 6183 Paseo Del Norte, Suite 180, Carlsbad, CA 92011, and our telephone number is (760) 547-2700. Our home page can be located on the Internet at http://www.ptsc.com.

We develop, market, and sell microprocessors, our technology upon which the microprocessors are based, and complementary products which enable computers and other data processing devices to communicate. These products can be used to connect to the Internet or other telecommunication networks. We also have a patent for technology which, if fully developed, may allow radar to be used to penetrate the ground or structures to find various objects. Our strategy is to exploit our microprocessor technologies through product sales, licensing, and strategic alliances and to litigate against those who may be infringing on our patents.

We believe our financial resources are sufficient to support our operations during at least the next twelve months.

Warrant Shares We Are Registering

We are registering 4,980,000 shares issuable on the exercise of warrants issued between April 26, 2004 and March 1, 2006.

Additional Shares We Are Registering

We are also registering 17,204,442 shares that are issued and outstanding.

Key Facts

Shares being offered 22,184,442 (6.13 % of our shares currently outstanding as of April 17, 2006)

Total shares outstanding prior to the offering as of February 28, 2006 349,336,560

Total shares outstanding assuming completion of the offering 354,316,560

Total shares that would be outstanding assuming exercise of all outstanding options and warrants 423,829,628

Price per share to the public Market price at time of resale

Total proceeds raised by offering None.

Dividend policy Patriot declared its first dividend on February 14, 2006 and another dividend on March 9, 2006. The Board of Directors may declare additional dividends in the future with due regard for the financial resources of Patriot and alternative applications of those financial resources.

RISK FACTORS

Before purchasing any shares of our common stock, we urge you to carefully consider the following discussion of risks as well as other information contained in this Prospectus. The following are what we believe to be all our material risks. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

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Patriot Has Reported Substantial Revenue In 2006 Which May Not Be Indicative Of Our Future Revenue Trends

During the first three quarters of fiscal 2006, the Company entered into license agreements, directly and through our joint venture with Technology Properties Limited, that generated license revenues of approximately $70,000,000 on a consolidated basis. Because of the uncertain nature of the negotiations that lead to license revenues, we cannot predict the amounts of future revenues from such agreements, or whether there will be future revenues from license agreements at all.

Patriot Is Dependent Upon A Joint Venture In Which It Is A Passive Partner For Substantially All Of Its Revenues

In June of 2005, we entered into a joint venture with Technology Properties Limited, pursuant to which Technology Properties Limited is responsible for the licensing and enforcement of Patriot’s microprocessor portfolio. This joint venture has been the source of virtually all of Patriot’s revenues since June of 2005. Therefore, given the absence of product sales on the part of Patriot or revenues from other sources, Patriot should be regarded as entirely dependent on the success or failure of the licensing and prosecution efforts of Technology Properties Limited on behalf of the joint venture.

Sales of our microprocessor products have resulted in limited revenues. Our other product lines have not generated enough revenue to support our company. We have experienced in the past and may experience in the future many of the problems, delays and expenses encountered by any early stage or small business, many of which are beyond our control. These include:

· substantial delays and expenses related to testing and development of our products and technologies,

· production and marketing problems encountered in connection with our products and technologies,

· competition from larger and more established companies, and

· lack of market acceptance of our products and technologies.

Patriot’s Limited Sales And Marketing Capabilities Have Affected Our Revenue

We currently have limited marketing capabilities and may need to hire additional sales and marketing personnel. We may not be able to recruit, train, or retain qualified personnel to sell and market our products and may not be able to develop a successful sales and marketing strategy. We also have very limited marketing experience. Any marketing efforts undertaken by us may not be successful or may not result in any significant sales of our products.

Patriot May Experience Difficulties In The Completion Of Its Development Stage Products

Our technologies and products are in various stages of development. We do not currently have in-house development personnel, nor have we retained independent researchers. Therefore, our development stage products may not be completed on a timely basis or at all. Additionally, even if we do recommence our development activities, our development stage products may not be completed due to the inherent risks of new product and technology development, limitations on financing, competition, obsolescence, the absence or loss of key personnel and other factors. Although we have licensed some of our technology at its current stage of development, we may not continue to be able to do so or that any revenues generated from licensing will be sufficient to support operations at their current level. Unanticipated technical obstacles can arise at any time and result in lengthy and costly delays or in a determination that further development is not feasible.

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Patriot Is Currently Involved In A Legal Dispute Which Could Impact Our Future Results Of Operations And Working Capital Position

We are currently involved in a lawsuit with a former legal advisor, in which the former legal advisor is asserting a claim to a part of the proceeds we received under recently signed license agreements. We believe that this claim is without merit. However, if we do not prevail in this lawsuit, or settle the matter, the cost of the resolution of this matter could have a material and adverse effect on our results of operations and cash reserves.

A Successful Challenge To The Proprietary Nature Of Our Intellectual Property Would Have A Significant And Adverse Effect On Us

A successful challenge to our ownership of our technology or the proprietary nature of our intellectual property would materially damage our business prospects. We rely on a combination of patents, trademarks, copyrights, trade secret laws, confidentiality procedures and licensing arrangements to protect our intellectual property rights. We currently have eight U.S. patents, one European patent, and one Japanese patent issued. Any issued patent may be challenged and invalidated. Patents may not issue from any of our pending applications. Any claims allowed from existing or pending patents may not be of sufficient scope or strength to provide significant protection for our products. Patents may not be issued in all countries where our products can be sold so as to provide meaningful protection or any commercial advantage to us. Our competitors may also be able to design around our patents.

Vigorous protection and pursuit of intellectual property rights or positions characterize the fiercely competitive semiconductor industry, which has resulted in significant and often protracted and expensive litigation. Therefore, our competitors and others may assert that our technologies or products infringe on their patents or proprietary rights. Persons we believe are infringing our patents are vigorously defending their actions and have asserted that our patents are invalid. Problems with patents or other rights could increase the cost of our products or delay or preclude new product development and commercialization by us. If infringement claims against us are deemed valid or if our infringement claims are successfully opposed, we may not be able to obtain appropriate licenses on acceptable terms or at all. Litigation could be costly and time-consuming but may be necessary to protect our future patent and/or technology license positions or to defend against infringement claims.

If A Large Number Of Patriot Shares Are Sold All At Once Or In Blocks, The Market Price Of Our Shares Would Most Likely Decline

Our warrant holders are not restricted in the price at which they can sell common stock acquired through the exercise of warrants. Shares sold at a price below the current market price at which the common stock is trading may cause the market price to decline. The shares of common stock that are issuable on the exercise of our warrants represent a significant portion of our fully-diluted capitalization.

The Market For Patriot’s Stock Is Subject To Rules Relating To Low-Priced Stock (“Penny Stock”) Which Limits Our Ability To Attract Competitive Funding

Our common stock is currently listed for trading in the NASD Over-The-Counter Bulletin Board Market and is subject to the “penny stock rules” adopted pursuant to Section 15(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In general, the penny stock rules apply to non-NASDAQ or non-national stock exchange companies whose common stock trades at less than $5.00 per share or which have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). Such rules require, among other things, that brokers who trade “penny stock” to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document, quote information, broker’s commission information and rights and remedies available to investors in penny stocks. Many brokers have decided not to trade “penny stock” because of the requirements of the penny stock rules, and as a result, the number of broker-dealers willing to act as market makers in such securities is limited. The “penny stock rules,” therefore, may have an adverse impact on the market for our common stock and may affect our ability to attract competitive funding.

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Our Share Price Could Decline As A Result Of Short Sales

The downward pressure on the price of our common stock as our warrant holders exercise their warrants and sell material amounts of common stock could encourage short sales by the warrant holders or others. When an investor sells stock that he does not own, it is known as a short sale. The seller, anticipating that the price of the stock will go down, intends to buy stock to cover his sale at a later date. If the price of the stock goes down, the seller will profit to the extent of the difference between the price at which he originally sold it less his later purchase price. Short sales enable the seller to profit in a down market. Short sales could place significant downward pressure on the price of our common stock.

Our Future Success Depends In Significant Part Upon The Continued Services Of Our Key Senior Management

Our future success depends in significant part upon the continued services of our key senior management personnel. The competition for highly qualified personnel is intense, and we may not be able to retain our key managerial employees or attract and retain additional highly qualified technical and managerial personnel in the future. None of our employees is represented by a labor union, and we consider our relations with our employees to be good. None of our employees is covered by key man life insurance policies.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus includes “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995, and we rely on the “safe harbor” provisions in those laws. The forward-looking statements in this Prospectus reflect our current views with respect to possible future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including specifically the absence of significant revenues and financial resources until the current fiscal year, no assurance that the development of technology can be completed or that its completion will not be delayed, significant competition, the uncertainty of patent and proprietary rights, uncertainty as to royalty payments and indemnification risks, trading risks of low-priced stocks and those other risks and uncertainties discussed herein that could cause our actual results to differ materially from our historical results or those we anticipate. In this Prospectus, the words “anticipates,” “believes,” “expects,” “intends,” “future” and similar expressions identify certain forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Patriot undertakes no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.

PLAN OF DISTRIBUTION

After the effective date of the registration statement of which this Prospectus is a part, each Selling Shareholder will be free to offer and sell his or her common shares at such times, in such manner and at such prices as he or she may determine. The types of transactions in which the common shares are sold may include transactions in the over-the-counter market (including block transactions), negotiated transactions, the settlement of short sales of common shares, or a combination of such methods of sale. The sales will be at market prices prevailing at the time of sale or at negotiated prices. Such transactions may or may not involve brokers or dealers. The Selling Shareholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their securities. The Selling Shareholders do not have an underwriter or coordinating broker acting in connection with the proposed sale of the common shares.

The Selling Shareholders may effect such transactions by selling common stock directly to purchasers or to or through broker-dealers, which may act as agents or principals. Such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders. They may also receive compensation from the purchasers of common shares for whom such broker-dealers may act as agents or to whom they sell as principals, or both (which compensation as to a particular broker-dealer might be in excess of customary commissions).

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The Selling Shareholders and any broker-dealer that acts in connection with the sale of common shares may be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any commissions received by such broker-dealers and any profit on the resale of the common shares sold by them while acting as principals may be deemed to be underwriting discounts or commissions.

Because the Selling Shareholders may be “underwriters” within the meaning of Section 2(11) of the Securities Act, the Selling Shareholders will be subject to prospectus delivery requirements.

Selling Shareholders also may resell all or a portion of their common shares in open market transactions in reliance upon Rule 144 under the Securities Exchange Act, provided they meet the criteria and conform to the requirements of such Rule.

SELLING SHAREHOLDERS

Selling Shareholders

The following table sets forth certain information with respect to the Selling Shareholders as of February 28, 2006. Except as set forth below, none of the Selling Shareholders currently is an affiliate of ours, and none of them has had a material relationship with us during the past three years. None of the Selling Shareholders are or were affiliated with registered broker-dealers.

Amount and Percentage of Common Stock After the Sale

Name Beneficial Ownership of Common Stock as of February 28, 2006 Maximum Number of Shares of Common Stock Offered for Sale Number %

Caplan, Stan 2,904,096 (6) 1,147,751 1,756,345 ____%

Daniels, Richard 3,795,862 3,795,862 - ____%

Gabourel, Victor 4,757,604 (1) 2,566,602 2,191,002 ____%

Hawk Associates 2,422,496 (2) 1,222,496 1,200,000 ____%

Mt. Savage Productions 1,000,000 (3) 1,000,000 - 0%

Opperman, Wayne 1,526,725 1,526,725 - 0%

Nunes, Daniel 2,100,000 500,000 1,600,000 ____%

Zolin, James & Josephine 2,545,206 2,425,006 120,200 ____%

Technology Properties Ltd. 3,700,000 (4) 3,500,000 200,000 0%

AMD Corporation 4,500,000 (5) 4,500,000 - 0%

(1) Includes 180,000 shares of common stock issuable upon the exercise of issued warrants.

(2) Frank Hawkins has ultimate voting and/or investment control over the securities owned by Hawk Associates. This amount includes 100,000 shares of common stock issuable upon the exercise of warrants dated March 1, 2006.

(3) Includes 1,000,000 shares of common stock issuable upon the exercise of warrants. Elwood G. Norris has ultimate voting and/or investment control over the securities owned by Mt. Savage Productions.

(4) Includes 3,500,000 shares of common stock issuable upon the exercise of warrants. Daniel Leckrone has ultimate voting and/or investment control over the securities owned by Technology Properties Ltd.

(5) Harry Wollin, General Counsel and Senior Vice President of AMD has ultimate voting and/or investment control over the securities owned by AMD Corporation.

(6) Included in this number are 193,548 restricted shares that were issued on March 23, 2006.

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OUR COMPANY

Patriot Scientific Corporation was organized under Delaware law on March 24, 1992, and is the successor by merger to Patriot Financial Corporation, a Colorado corporation incorporated on June 10, 1987. In 1997, we emerged from the development stage primarily as a result of the acquisition of Metacomp Inc. Our address is 6183 Paseo Del Norte, Suite 180, Carlsbad, California 92011, and our telephone number is (760) 547-2700. Our home page can be located at http://www.ptsc.com.

We develop, market, sell, and license microprocessors and the technology incorporated within our microprocessors. We also have a patent for a technology which, if fully developed, might allow radar to penetrate the ground or structures to identify objects. We also owned gas plasma antenna technology which we sold for $250,000 in August 1999. In October 2003, we received a final royalty payment of $75,500 from the sale of the gas plasma technology. Our strategy is to exploit our microprocessor technologies through licensing, strategic alliances, and product sales and to litigate against those who we believe are infringing on our patents.

We believe our financial resources are sufficient to support our operations during at least the next twelve months.

Background

In February 1989, we completed our initial public offering under a registration statement on Form S-18 under the Securities Act of 1933. This offering raised gross proceeds of $50,000 and net proceeds of approximately $28,640 upon the sale of 2,500,000 units at $.02 per unit. Each unit sold in the public offering consisted of one common share and one Class A common stock purchase warrant exercisable to acquire one share of common stock and one Class B common stock purchase warrant. All Class A and Class B warrants have since been exercised or have lapsed.

On May 12, 1992, we redomiciled ourselves from Colorado to Delaware by merging into a wholly-owned Delaware subsidiary, Patriot Scientific Corporation, organized for that purpose. The reincorporation resulted in a reverse stock split. Three shares of the Colorado corporation, par value $.00001, were converted into one share of the Delaware corporation, par value $.00001. The reincorporation also effected a change in our charter and bylaws and a name change to Patriot Scientific Corporation.

In May 1993, we registered under the Securities Act of 1933 a total of 7,631,606 shares issuable upon the exercise of outstanding Class A and Class B common stock purchase warrants. Upon the exercise of those warrants, we received net proceeds of $3,343,915 and issued 7,538,102 common shares. None of such warrants remain outstanding.

Effective May 31, 1994, we entered into an asset purchase agreement and plan of reorganization with nanoTronics Corporation located in Eagle Point, Oregon and Helmut Falk. We issued a total of 8,500,000 restricted common shares to nanoTronics to acquire certain microprocessor technology of nanoTronics. The technology acquired was used to develop a sophisticated yet low cost microprocessor. 5,000,000 of the shares were issued on a non-contingent basis, and the remaining 3,500,000 shares were issued subject to the terms of an earnout escrow arrangement, which concluded on May 31, 1999.

Effective December 26, 1996, we acquired 96.9% of the outstanding shares of Metacomp, Inc., a California corporation, from 56 shareholders in exchange for the issuance of 1,272,068 shares of our common stock. Based on the closing price of our common stock of $1.375 on the date of the acquisition, the price of the acquisition was $1,749,094. This business combination was accounted for as a pooling-of-interests.

AVAILABLE INFORMATION

We file reports, proxy statements and other information with the SEC, and these reports may be inspected and copied at the public reference facility maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. Copies of such material may be obtained from the Public Reference Section of the SEC’s Washington, D.C. office at prescribed rates.

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We mail a copy of our Annual Report on Form 10-K along with a proxy statement to our shareholders prior to our annual meeting.

We have filed a registration statement on Form SB-2, of which this Prospectus is a part, with the SEC. This Registration Statement or any part thereof may also be inspected and copied at the public reference facility of the SEC.

Our filings may also be accessed through the SEC’s web site (http://www.sec.gov) or by visiting our web site at (http://www.ptsc.com) and linking to the SEC’s site. Our website is not part of this prospectus.

BUSINESS

Technology

Our business involves the following technologies:

· Ignite microprocessor technology;

· A portfolio of patents covering the basic design architecture found in microprocessors used in a wide variety of end-user products including personal computers, servers, workstations, printers, routers, home theater systems, digital TVs, video game players, DVD Recorders/Players, mobile handsets/PDA`s, portable media players, microwave ovens, dishwashers, medical equipment, automotive electronics, aircraft/aerospace electronics, and other modern microprocessor-based products found in consumer and business applications.; and

· Technology providing for remote power charging of electronic devices.

The stage of development of each of our technologies is as follows:

· Ignite microprocessor. This technology generated minor amounts of revenue in fiscal 2004 from the sale of development boards and microprocessors and from initial license fees. In 2005 it generated revenues of approximately $1,200,000 in connection with the sale of a license to Advanced Micro Devices, Inc (“AMD”). We run the technology on a 0.18-micron microprocessor, which is not in current production. We have ported the WindRiver VxWorks operating system and the Sun Microsystems personalJava virtual machine to the microprocessor. In addition, the technology is available for sale as intellectual property, which enables the prospective customer to incorporate the microprocessor functions with other parties’ applications to arrive at a system on a chip solution. We are currently evaluating the extent to which the Ignite technology may contribute significant revenue, if any, in the future as a product line in the form of microprocessor chips or intellectual property licenses. During at least the three years prior to June, 2005, we focused the majority of our efforts on the Ignite technology. The Ignite technology is targeted for the embedded controller and Java language processor marketplaces.

· Microprocessor patent portfolio. In the immediate future, we will be focusing our efforts primarily on the patent portfolio licensing and enforcement efforts being conducted on our behalf by the TPL Group. We currently anticipate that these efforts will be our principal source of revenue in the future, although we will continue to evaluate the Ignite microprocessor technology and the extent to which the Ignite technology may contribute significant revenue, if any, in the future as a product line in the form of microprocessor chips or as intellectual property licenses. See “BUSINESS - Our Licenses, Patents, Trade Secrets, and Other Proprietary Rights.”

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· Remote power charging technology. In November, 2004, a patent application entitled “Remote Power Charging of Electronic Devices” was assigned to us. The patent application has 53 claims and has no conflicting prior art. We expect that it will be granted and that it should protect the essential systems, methods, apparatus and applications of the technology it describes. We anticipate that the Ignite microprocessor would be selected as the microprocessor to be used in products based on this technology. We are in the initial stages of evaluating this technology and its applicability and feasibility for further research and development, and we do not know whether it will be the basis for any commercial product or that it will generate any revenue for the Company.

Our Microprocessor Technology

General Background. Effective May 31, 1994, we entered into an asset purchase agreement and plan of reorganization with nanoTronics Corporation located in Eagle Point, Oregon, and Helmut Falk to acquire certain microprocessor technology. We used the technology we acquired from nanoTronics to develop a sophisticated yet low cost microprocessor by enhancing the microprocessor design, adding additional technical features to further modernize the design, and improving and testing the new design.

We initially fabricated a prototype 0.8-micron microprocessor in May 1996. The next generation was a 0.5-micron microprocessor that was delivered in September 1997. The 0.5-micron microprocessor was employed in demonstrations for prospective customers and was shipped in limited numbers to customers as an embedded microprocessor. In 1998 we introduced a 0.35-micron microprocessor whose features included a reduction in size and improved performance. In addition, in September 2000 we completed a VHDL model of this technology which enables customers to purchase intellectual property incorporating microprocessor functions with other parties’ applications to arrive at a system on a chip solution. By purchasing this software model, customers can significantly reduce their time to market by simulating results as opposed to trial and error commitments to silicon production. In 2003 we further reduced the size of our silicon production to 0.18-microns.

Industry Background. The semiconductor logic market has three major sectors:

· standard logic products;

· application specific standard products; and

· application specific integrated circuits.

Standard logic products, such as the Intel’s X86 and Pentium and Motorola’s 680X0 microprocessor families, are neither application nor customer specific. They are intended to be utilized by a large group of systems designers for a broad range of applications. Because they are designed to be used in a broad array of applications, they may not be cost effective for specific applications. Application specific integrated circuits are designed to meet the specific application of one customer. While cost effective for that application, application specific integrated circuits require large sales volumes of that application to recover their development costs. Application specific standard processors are developed for one or more applications but are not generally proprietary to one customer. Examples of these applications include modems, cellular telephones, other wireless communications devices, multimedia applications, facsimile machines and local area networks. We have designed our microprocessor to be combined with application specific software to serve as an embedded control product for the application specific standard processor market sector.

Application specific standard processors are typically used in embedded control systems by manufacturers to provide an integrated solution for application specific control requirements. Such systems usually contain a microprocessor or microcontroller, logic circuitry, memory and input/output circuitry. Electronic system manufacturers combine one or more of these elements to fit a specific application. The microprocessor provides the intelligence to control the system. The logic circuitry provides functions specific to the end application. The input/output circuitry may also be application specific or an industry standard component. The memory element, if not on the microprocessor, is usually a standard product used to store program instructions and data. In the past, these functions have been executed through multiple integrated circuits assembled on a printed circuit board. The requirements for reduced cost and improved system performance have created market opportunities for semiconductor suppliers to integrate some or all of these elements into a single application specific standard processor or chip set, such as the Ignite family of microprocessors. The Ignite family provides close integration of the microprocessor and input/output function with the logic circuitry, thereby providing an advanced application specific standard processor.

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Embedded control systems enable manufacturers to differentiate their products, replace less efficient electromechanical control devices, add product functionality and reduce product costs. In addition, embedded control systems facilitate the emergence of completely new classes of products. Embedded control systems have been incorporated into thousands of products and subassemblies worldwide, including automotive systems, remote controls, appliances, portable computers and devices, cordless and cellular telephones, motor controls and many other systems.

Microprocessors are generally available in 4-bit through 64-bit architectures, which refers to the amount of data they can process. 4-bit microprocessors are relatively inexpensive, typically less than $1.00 each. Although they lack certain performance and features, they account for more than 40% of worldwide microcontroller volume. Also in general use today are 8-bit architectures, generally costing $1.00 to $10.00 each and accounting for an additional 40% of worldwide microcontroller volume. To date 16-bit, 32-bit and 64-bit architectures, with typical costs of over $10.00 each, have offered very high performance, but are generally considered to be expensive for high-volume embedded control applications. The use of 16-bit, 32-bit and 64-bit architectures offers fewer internal limitations, making programming easier and providing higher performance. Although generally more expensive per unit and requiring more support logic and memory, these devices offer many advantages for more sophisticated embedded control systems.

Electronic system designers, driven by competitive market forces, seek semiconductor products with more intelligence, functionality and control that can be used to reduce system costs and improve performance. For these needs, the Ignite product family was designed to be a sophisticated 32-bit microprocessor with advanced features. The Ignite product family uses a smaller number of transistors compared to other RISC (reduced instruction set computer) processors, which results in less power consumption and more economical prices compared to other embedded control applications. This creates the opportunity for the development of new, cost-effective applications.

Technology Description. Conventional high-performance microprocessors are register-based with large register sets. These registers are directly addressable storage locations requiring a complex architecture that consumes costly silicon. This conventional architecture provides processing power for computer applications but complicates and slows the execution of individual instructions and increases silicon size, thereby increasing the microprocessor cost.

Our technology is fundamentally different from most other microprocessors, in that the data is stored in groups and certain information is known to be at the top of a stack as opposed to being stored in a register. Our microprocessor employs certain features of both register and stack designs. The resultant merged stack-register architecture improves program execution for a wide range of embedded applications. Our design combines two processors in one highly integrated package, a microprocessing unit for performing conventional processing tasks, and an input-output processor for performing input-output functions. This replaces many dedicated peripheral functions supplied with other processors. The microprocessor`s design simplifies the manipulation of data. Our architecture employs instructions that are shrunk from 32-bits to 8-bits. This simplified instruction scheme improves execution speed for computer instructions. Our architecture incorporates many on-chip system functions, thus eliminating the requirement of support microprocessors and reducing system cost to users.

The 0.8-micron microprocessor was designed to operate at a speed of 50Mhz; the 0.5-micron microprocessor at a speed of 100Mhz; the 0.35-micron microprocessor at 150MHz; and the 0.18-micron operates at a speed of 360Mhz. They are all compatible with a wide range of memory technology from low cost dynamic random access memory to high-speed static random access memory. The microprocessors can be packaged in various surface-mount and die-form packaging. There can be no assurance that the designed speed will be achieved with the production model of the 0.18-micron microprocessor or future versions or that all of the desired functions will perform as anticipated.

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Our technology is not designed or targeted to compete with high-end processors for use in personal computers. It is targeted for embedded control applications. We believe that the features described above differentiate the Ignite family from other 8-bit to 64-bit microprocessors targeted for embedded control applications. Considering the reduced requirement for support microprocessors, the Ignite family is intended to be available at a high volume price that should be price competitive with high-end 8-bit microprocessor and general 16-bit microprocessor systems but with higher performance (speed and functional capability). The Ignite family has been designed to allow high-speed and high-yield fabrication using generally available wafer fabrication technology and facilities.

The Ignite Microprocessor as a Java Processor. We believe the Ignite microprocessor architecture is capable of being an efficient and cost effective Java programming language processor, because Java is designed to run on a stack-oriented architecture and the Ignite architecture executes the virtual stack machine internal to Java efficiently. Many Java byte codes or instructions require only a single 8-bit Ignite family instruction to be executed, providing a performance advantage over other more expensive processors that require six or more 32-bit instructions to do the same task. This feature allows the execution of Java programs with increased speed and reduced code size thereby enabling lower system memory costs. In addition, the incorporation of many on-chip system functions is expected to allow the Ignite family to perform most of the other functions required of an Internet computer device or Java accelerator, thereby eliminating compone